Article

The Continuing Evolution of Omidyar Network

November 30, 2017

By Matt Bannick, Managing Partner at Omidyar Network

Like the entrepreneurs that we are fortunate to be able to support, Omidyar Network must continuously evolve to be most effective; we must adapt to changing conditions and seize promising opportunities. I would like to share with you the outlines of exciting changes that we plan to implement in the coming months.

Our Journey

First, some history. The Omidyar Network story is one of innovation and evolution. When our founders, Pierre and Pam Omidyar, created the Omidyar Family Foundation in the wake of eBay’s 1998 IPO, they first took a traditional approach to their philanthropy, providing grants to results-oriented not for profits.

Pierre soon realized his experiences as the founder of eBay were applicable to his philanthropy. He’d seen firsthand that markets can be a force for good, and he also witnessed the opportunities they can create. He recognized that for-profit firms have advantages in driving social change, including the ability to scale rapidly through retained earnings and by tapping commercial capital markets. Also, companies only succeed if they meet some underlying market demand at a price above the cost of producing their good or service. He reasoned that one could do enormous good by investing in high-growth businesses that had social impact embedded in their business model; that is, businesses that delivered a product or service that had a positive impact on society.

These insights led to the creation of Omidyar Network, a hybrid entity that enabled for-profit investing alongside grant-making. Omidyar Network thus became one of the early pioneers in what has become known as impact investing.

Thirteen years later, it is gratifying to see impact investing’s momentum and the extent to which it has raised awareness that one may drive positive change by investing as well as by grant-making. Already, more than 200 impact investors have $114bn in assets under management. The field’s view has broadened to recognize investment opportunities across a returns continuum, institutional investors have created impact investment funds in response to customer demand, and the development community and innovative governments have spurred regulatory reforms that encourage investments aimed at driving positive social change.

Impact investing was not the only innovation we have adopted and fostered at Omidyar Network. Some 10 years ago, we began to recognize that while our investments and grants were crucial, they weren’t, by themselves, going to bring about the social change we sought. Externally, we built on our early-stage investing to also focus on entire sectors, which included not only investing in entrepreneurs and social entrepreneurs, but also in the infrastructure and public policy that shapes the entire ecosystem of a given sector.

Internally, we experimented with approaches and structures that had not been systematically applied to philanthropy. We created a horizontal partnership structure to attract top talent to lead our initiatives and to fuel a collaborative culture reflective of the best of an entrepreneurial startup environment. We borrowed the best practices of venture capital and added a human capital practice to support our investees with executive coaching and leadership development, governance, organizational design, and recruiting, among other services. We also built out an intellectual capital team to provide sector insights, identify new horizon areas for impact, deliver strategic support for our initiatives, and capture and share our learnings with our peers and the field. Additionally, we’ve tapped local talent to lead our investments and opened offices in countries such as India and the UK. We believe we are better investors and partners when we hire those who possess the deep local knowledge and networks.

We are proud of our legacy of innovation. And we are poised to innovate yet again. Our heritage is one of an entrepreneur. We strive to execute, learn, refine … and execute again. It’s a disciplined cycle designed around a belief that one can always do better. Pierre’s approach to philanthropy is no different, and it is a reflection of his belief that to thrive, societies, institutions, and individuals must adapt and evolve. In that spirit, I’m sharing several steps we are taking to evolve Omidyar Network.

At the heart of these changes is a desire to dramatically increase the level of empowerment of the initiatives that currently constitute Omidyar Network. In addition, we are increasing our internal capacity to research, envision, and incubate new initiatives. Taken together, our existing initiatives will gain greater autonomy, new initiatives will be incubated and launched, and Omidyar Network will shift from a single organization comprised of multiple initiatives to a network of deeply linked initiatives supported by a core organization.

Our Evolution

So, how did we get here and what are our specific plans? Over the years, we have grown our initiatives into organizations with exceptional leadership, talented teams, and strong track records. In fact, our Governance & Citizen Engagement initiative now deploys more capital annually than all of Omidyar Network did when I joined in 2007. To foster their continued growth, we recognize initiatives and geographies where we have a significant operation, such as India, need greater latitude and empowerment, and we are therefore restructuring Omidyar Network to refine and formalize the organizing principles we put in place when we created our initiative structure some years back.

Initiatives and our operation in India will exercise greater control and decision-making authority over their work, including strategy, budgets, investments, staffing, and performance metrics. This means that each initiative will make its own investment decisions, identify in which geographies it operates, and determine the right balance of human resources to support its strategies and theories of change.

We will also bolster the initiatives with additional resources by moving some functions, such as human capital and marketing, into the initiatives and thereby further integrate these skills into the initiative’s sector-focused investment and policy teams. The net effect is that decision-making will be made closer to the work of each initiative, which promises to accelerate innovation and impact. We believe these changes will help make us more responsive to the needs of our investees.

Two such demonstrable changes will be our Emerging Tech and Governance & Citizen Engagement initiatives spinning out of Omidyar Network in 2018. Like Humanity United in 2008, Democracy Fund in 2014, and Omidyar Technology Ventures in 2015, the Emerging Tech and Governance & Citizen Engagement initiatives have grown to the point where we believe they’re ready to stand on their own and operate as organizations fully independent of Omidyar Network. Shripriya Mahesh will continue to lead Emerging Tech, which will focus on venture investing in the United States, and Stephen King will continue to lead Governance & Citizen Engagement. Both will still reside within The Omidyar Group, and both will continue to be funded by the Omidyars. Shripriya and Stephen will share more information about their new entities in the coming months.

Our other initiatives, Education, Financial Inclusion, and Property Rights, as well as our operations in India, will, for the time being, continue under the Omidyar Network umbrella, albeit with greater autonomy as I described above. It’s our expectation that all of our initiatives will progress along on a continuum of decision-making authority and eventually evolve into fully autonomous entities. Some may choose to take their own name, while others opt to continue under the Omidyar Network brand.

Lastly, and as equally exciting, are the steps we will take to deepen Omidyar Network’s capacity to enable the next stage of our evolution.

We are going to expand capabilities and capacity to investigate and incubate new ideas, some of which we anticipate will evolve into new initiatives. Two such efforts are our work in Digital Identity and Tech and Society. CV Madhukar, who led our Governance & Citizen Engagement work in India, has made tremendous early progress building our Digital Identity practice, which invests in digital identity technologies and policies that will enable greater participation in our modern economy while protecting individuals’ security, user-control, and right to privacy.

Likewise, Paula Goldman, who until recently led our Impact Investing work, has undertaken a new effort, Tech and Society. Its aim is to help harness the potential of technology’s positive impact on society and to help mitigate unintended consequences. News about the risks of job loss, AI, and threats to privacy have grown increasingly loud in recent months, and we hope to engage with a broad set of actors to help us collectively address some of these emergent concerns.

Of course, we will also continue to support our initiatives and geographies with the core of our functional teams and shared services, and we will continue to engage with our peers across the philanthropic and investing communities by sharing our learning and perspectives on topics such as impact investing, business for development, and innovations in philanthropy.

It’s an exciting time for Omidyar Network. As we accelerate the pace at which we stand up our initiatives as more autonomous organizations, we see numerous opportunities to apply our learnings and to help propel the next wave of high impact, innovative philanthropy. I wish Shripriya and Stephen the very best as they and their teams take up their own banners. Additionally, on behalf of my colleagues, I wish to thank our founders, Pierre and Pam Omidyar, for placing their trust in us as we embark on what we’re calling Omidyar Network 3.0.

To all of our investees, we look forward to serving you with even greater effect, and to our colleagues across the sectors in which we operate, we look forward to our continued partnership so that together we can advance our mutual aims of creating a world of greater opportunity.